ITV is poised to cap a remarkable business turnaround by rejoining the ranks of blue-chip companies in the FTSE 100, after reporting bumper profits in 2010 thanks to a surge in TV advertising revenues, fuelled by hit shows such as The X Factor and Downton Abbey.

Britain's largest commercial broadcaster reported profits before tax of £286m for last year, 11 times the £25m it made in recession-hit 2009, with total revenues reaching £2bn, driven by a market-beating 16% increase in TV advertising.

ITV, which was buoyed up enough by the financial outlook to reinstate a dividend payment for its interim results in July, said that advertiser confidence had continued into the first quarter of 2011 with ad revenues on track to be up by 12% year-on-year. The royal wedding and Easter period would see April up between 8% and 12%.

But a warning that there would be tougher times from the second quarter on, a point when the market improved significantly last year and advertisers spent heavily on events such as the World Cup, failed to deter City enthusiasm for ITV, with its share price up more than 9% to 90.66p, its highest level since 2007.

This surge leaves ITV well positioned to make a return to the FTSE 100, which meets next Wednesday for its quarterly review of which stocks to admit or drop, with automatic readmittance for any company ranked 90th or higher by market value. ITV, which fell out of the FTSE in September 2008 on the way to recording a £2.7bn loss, is hovering at about 81st position, with a market capitalisation of more than £3.6bn.

The FTSE 100 committee will make its decision based on the closing share price of stocks on Tuesday. Reinstatement would see ITV rejoining the small number of media blue-chips, which include Financial Times owner Pearson, Sir Martin Sorrell's WPP, BSkyB and Reed Elsevier.

The broadcaster's solid performance in 2010 was blighted by production division ITV Studios, which makes shows such as Coronation Street and Come Dine With Me, and saw revenues fall 12.5% year-on-year to £293m and earnings drop by 11% to £81m.

ITV Studios' main problem was a 23% fall in international production revenue, primarily because I'm A Celebrity ... Get Me Out Of Here was not produced in the US, Germany or Sweden last year. The only positive trend at the division was an increase from 50% to 53% in the amount of the ITV1 original programming budget being taken by ITV Studios.

Management is trying to improve ITV Studios' performance by developing TV formats that sell around the world. The division has not created an international hit entertainment format since Dancing on Ice in 2006.

It has been rumoured that ITV's stronger financial position may lead to a major acquisition to drive growth at ITV Studios. Possible targets include Midsomer Murders producer All3Media. Debt has been slashed from £612m to £188m, the pension deficit has been reduced to £313m and ITV is cash-rich, with £860m.

ITV is planning to invest an extra £25m this year – £12m on attracting programme-making talent to ITV Studios and developing new TV pilots, £7m on itv.com and £6m on digital channels such as ITV2.

Adam Crozier, the ITV chief executive, said the first priority for ITV Studios was "organically sorting out a way to organise and run it and improve the number of ideas and quality coming out of it".

He added that over a five-year period ITV needed to expand its international production base. ITV has a presence in seven countries and aims to increase this to 17 through a combination of growth, partnership and investment or acquisition.

The company is also targeting improvement at its online operation. Revenues at itv.com rose 17% year-on-year to £28m. Crozier said the company aimed to widen online revenue beyond a dependence on advertising with the launch of a paid-for online TV service in the fourth quarter of this year.

He said ITV needed to "improve and give wider distribution" to the online TV service ITV Player, adding that it would "hopefully be on mobile phones and tablets shortly and [we are] scoping connected TV". Crozier admitted that the broadcaster was having talks with Google, a company that had been referred to by former ITV executive chairman Michael Grade as a "parasite". But he maintained that any online television agreements had to have ITV's concern about content control at heart.

He also attempted to scotch the persistent rumours of disagreements with Simon Cowell about his continuing on-screen participation in ITV's crown jewel, The X Factor, although he admitted final details had not been hammered out for the next series.

Cowell has a hectic transatlantic schedule, thanks to the launch of The X Factor USA this autumn.

"We are not due to make decisions on X Factor yet for a couple of months. There are a number of options," said Crozier. "I can absolutely confirm for any avoidance of doubt that Britain's Got Talent will appear in the spring and X Factor in the autumn."